Banis Restaurant Design, Inc. v. Serrano

• Decision Date: 18 November 2005
• Docket Number: No. C048900.,C048900.
• Citation: 134 Cal.App.4th 1035,36 Cal.Rptr.3d 532
• Parties: BANIS RESTAURANT DESIGN, INC., Plaintiff and Appellant, v. Borgata SERRANO et al., Defendants and Respondents.
• Court: California Court of Appeals Court of Appeals

36 Cal.Rptr.3d 532

134 Cal.App.4th 1035

BANIS RESTAURANT DESIGN, INC., Plaintiff and Appellant, v. Borgata SERRANO et al., Defendants and Respondents.

No. C048900.

Court of Appeal, Third District.

November 18, 2005.

Craig N. Beardsley, Jones & Beardsley, Bakersfield, CA, for Plaintiff and Appellant.

Kenneth M. Hardgrove, Sherwood and Hardgrove, Los Angeles, CA, for Defendants and Respondents.

HULL, J.

Business and Professions Code section 7031, subdivision (a) precludes an unlicensed contractor from filing suit "for the collection of compensation for the performance of any act or contract where a license is required[.]" (Unspecified statutory references that follow are to the Business and Professions Code.)

When plaintiff Banis Restaurant Design, Inc., filed suit against defendants Borgata Serrano (Serrano) and Bank of America to recover the unpaid balance on a contract, defendants responded by filing a demurrer, asserting in part that plaintiff was not a licensed contractor and therefore was barred from seeking relief. The trial court agreed and sustained the demurrer without leave to amend.

On appeal from the ensuing judgment of dismissal, plaintiff contends that the court should have permitted amendment of its complaint to allege facts demonstrating that the absolute bar of section 7031 did not apply. We conclude any such allegations would have contradicted plaintiff's original pleadings, and therefore affirm the judgment.

STANDARD OF REVIEW

"A demurrer tests the sufficiency of a complaint and admits all facts properly pleaded." (Setliff v. E.I. Du Pont de Nemours & Co. (1995) 32 Cal.App.4th 1525, 1533, 38 Cal.Rptr.2d 763.) "When reviewing a judgment dismissing a complaint after the granting of a demurrer without leave to amend, courts must assume the truth of the complaint's properly pleaded or implied factual allegations. [Citation.] Courts must also consider judicially noticed matters. [Citation.] In addition, we give the complaint a reasonable interpretation, and read it in context. [Citation.] If the trial court has sustained the demurrer, we determine whether the complaint states facts sufficient to state a cause of action." (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081, 6 Cal.Rptr.3d 457, 79 P.3d 569.) In making this determination we are not bound by the trial court's construction but instead make our own independent judgment as to the sufficiency of the complaint. (Marina Tenants Assn. v. Deauville Marina Development Co. (1986) 181 Cal.App.3d 122, 127, 226 Cal.Rptr. 321; see also Vallejo Development Co. v. Beck Development Co. (1994) 24 Cal.App.4th 929, 937, 29 Cal.Rptr.2d 669 [applicability of section 7031 presents question of law requiring de novo review].)

If a court sustains a demurrer without leave to amend, "we must decide whether there is a reasonable possibility the plaintiff could cure the defect with an amendment. [Citation.] If we find that an amendment could cure the defect, we conclude that the trial court abused its discretion and we reverse; if not, no abuse of discretion has occurred. [Citation.] The plaintiff has the burden of proving that an amendment would cure the defect." (Schifando v. City of Los Angeles, supra, 31 Cal.4th at p. 1081, 6 Cal.Rptr.3d 457, 79 P.3d 569.) This showing may be made for the first time in the appellate court, but it must be made. (Smith v. State Farm Mutual Automobile Ins. Co. (2001) 93 Cal.App.4th 700, 711, 113 Cal.Rptr.2d 399; Code Civ. Proc., § 472c.)

FACTS AND PROCEEDINGS

In July 2004, plaintiff filed a complaint alleging seven causes of action relating to an unpaid balance on a contract.

The first cause of action, for breach of contract, asserted that plaintiff "was in good faith and substantial compliance with all applicable licensing statutes." Plaintiff asserted that in December 2001, it entered into a contract with defendant Serrano "to provide design labor, materials, equipment and services to be used and incorporated into the work of improvement referenced herein as the PROJECT." Between January 2002 and May 2004, plaintiff and defendant Serrano "entered into a series of additional agreements, some written and others verbal, all confirmed by written invoices for the provision by plaintiff to defendants of additional labor, materials, equipment and services to the Project. Plaintiff furnished all labor services, equipment and materials for use by defendant[] in the PROJECT. All of said labor, services, equipment and materials were to be used or consumed in, and were actually used or consumed in said PROJECT. The agreed sum to be paid to plaintiff for labor, materials, equipment and services provided by plaintiff was and is the principal amount of $1,773,943.33. Defendants have paid to plaintiff the amount of $1,554,095.21. The balance of $219,848.12 remains unpaid, due and owing to Plaintiff."

A second cause of action sought to foreclose on a mechanic's lien. Plaintiff incorporated its previous allegations and asserted that in May 2004, after it had "ceased performance and the furnishing of labor, equipment, materials and services to the work of improvement," it filed and recorded a mechanic's lien for $216,821.80, "which price is the reasonable value of all labor, materials and services plaintiff has furnished, after deducting all just credits." Plaintiff also alleged that any interest of defendant Serrano or defendant Bank of America in this property was subordinate to plaintiff's lien.

The third through sixth causes of actions alleged alternative theories for recovery of the unpaid balance by incorporating the allegations from the breach of contract cause of action and asserting claims entitled "Common Count — Agreed Amount," "Common Count — Reasonable Value," "Common Count — Account Stated," and "Open Book Account."

The seventh cause of action, entitled "Stop Notice," asserted that plaintiff had served a verified stop notice on defendants Serrano and Bank of America, that there had been sufficient funds to pay plaintiff's claims, but that defendants had not paid the amount due.

Plaintiff sought general damages in the amount of $219,848.12. It also asked the court to foreclose on the mechanic's lien, declare that lien superior to any interests of defendant, and order the real and personal property be sold, with proceeds applied to plaintiff's claim. Plaintiff also sought an order "directing payment to plaintiff from the funds withheld, or which should have been withheld" by defendant Bank of America.

Plaintiff incorporated several exhibits into its complaint, including the design/furnish contract it had entered into with defendant Serrano (exh. A) and the mechanic's lien it had recorded (exh. B).

Exhibit A, the contract between plaintiff and defendant Serrano, described the job as a "Restaurant and Market Project" and provided that plaintiff "shall prepare the drawings and specifications for the interior of the Project, and shall also procure the equipment, furnishings, material for the Project." Section IV of the agreement provided that "[c]ompensation for design services shall be $16,000." Section VII listed the design services to be provided as:

"1. Floor plan

"2. Equipment & Fixture List

"3. Electrical Plan Drawings

"4. Plumbing Plan Drawings

"5. Reflected Ceiling Plan Drawings

"6. Color selections

"7. Coordination of Architect, Electrical, Mechanical and Structural Engineers

"8. Business Plan

"9. Interior elevations of all eating areas."

Section V of the agreement was entitled "Compensation for Procurement of Equipment, Furnishings, Materials and Labor." It provided in relevant part:

"For Professional Services for the procurement of Project equipment, furnishings, material, and related labor, [plaintiff's] Compensation is to be incorporated in a Presented price in the form of a Proposal to the client of all equipment, furnishings, materials, and labor required to complete the Project. It is agreed that all equipment, furnishings, materials, and labor shall be purchased exclusively through [plaintiff], which [sic] the exception of furniture purchase in Italy by the client."

Exhibit B, the mechanic's lien, stated that plaintiff claimed a mechanic's lien for the labor, services of the labor, services, equipment and or materials furnished for a work of improvement on defendant Serrano's property. Plaintiff described this work as "FURNISHED RESTAURANT EQUIPMENT AND FURNISHINGS," and signed a verification under penalty of perjury.

Defendants demurred to plaintiff's complaint, asserting in part that plaintiff was not a licensed contractor and therefore was barred from seeking recovery for any amounts owed under the contract.

Plaintiff responded that because its agreement was limited to providing design work for defendant Serrano, no contractor's license was required. It also argued that it was exempt from licensing provisions under sections 7045 and 7052. Section 7045 provides that the licensing provisions do not apply "to the sale or installation of any finished products, materials, or articles of merchandise that do not become a fixed part of the structure, nor shall it apply to a material supplier or manufacturer furnishing finished products, materials, or articles of merchandise who does not install or contract for the installation of those items." Section 7052 exempts from licensing requirements "any person who only furnishes materials or supplies without fabricating them into, or consuming them in the performance of, the work of the contractor."

In reply, defendants asserted that plaintiff's own description of the work to be performed for defendant Serrano encompassed far more than design services, and required a contractor's license. They also argued that the claimed statutory exemptions did not apply.

The trial court agreed with defendants and sustained the demurrer without leave to amend. Plaintiff appeals from the ensuing judgment of dismissal.

DISCUSSION

On appeal, plainti...